Rethink Campaigns

Vancouver Observer / National Observer ENTIRELY REMOVED Three Articles About Vivian Krause

As readers of this blog are aware, the Vancouver Observer/National Observer published a series of articles alleging that the writer of this blog, Vivian Krause, is or was part of a "planned attack" against environmental against charities. In essence, the VO/NO painted me, Vivian Krause, as a stooge of the Conservatives, getting paid via speaking engagements that were orchestrated by Senator Mike Duffy. As I explained in detail in previous posts (here and here), these articles were grossly inaccurate and untrue. I believe that these articles were defamatory and were seriously hurting my chances to earn a living. As a result, I sought legal counsel and took action in April of 2017.

Three entire articles about me have now been removed from the web-sites of the Vancouver Observer and the National Observer. The first of these articles was published on April 10, 2015, and removed at around 1 am on August 25, 2015. The second article was published on May 7, 2015. The original author of the first article was Danny Kresnyak. His name was later replaced with that of Jenny Uechi. The second article was authored by Sandy Garossino and Mychaylo Prystupa.

The Vancouver Observer/National Observer also removed an entire article by Mike De Souza, published under the headline, "My former employer attacked me." In conjunction with that article, Mr. De Souza filed a complaint against the Financial Post with the National News Media Council. The complaint was dismissed by the National News Media Council on December 1, 2016.

The Vancouver Observer and the National Observer are published by Observer Media Group.

As alleged in court documents filed on May 5, 2017, the Observer Media Group appears to me to have vested interests and ulterior motives in seeking to discredit me so that my work is not taken seriously.

Vested Interests and Ulterior Motives

In making allegations of vested interests and ulterior motives, I do not do so lightly. These are serious matters.  In the remainder of this post, I'll begin to explain the basis for these allegations.

As I reported in The Financial Post in October 3, 2016, Observer Media Group is funded in part by the Tides Foundation, based in San Francisco, and its Canadian counter-part, the Tides Canada Foundation, based in Vancouver. The founder and publisher of the Observer Group is Linda Solomon Wood who is a sister of Joel Solomon. Known in Vancouver as the mayor's best friend and financial backer, Mr. Joel Solomon has a long history with the Tides Foundation. According to U.S. tax returns, Mr. Solomon was an independent contractor to Tides as far back as 1997. Mr. Solomon is also a former chairman of the board of the Tides Foundation and was a paid employee of the Endswell Foundation, a central charity in the Tides network.

According to a series of covering letters on payments that were posted at the web-site of the Tides Foundation, Tides Canada Foundation has made dozens if not hundreds of payments to ineligible organizations via a mechanism called the Tides Canada Foundation Exchange Fund. By its own admission, Tides Canada has processed at least $22 million via its Exchange Fund.

As I testified to a Senate committee (November of 2016), it is clear to me, from my lay perspective, that Tides Canada Foundation has been involved in a tax fraud scam wherein Tides Canada Foundation received millions of dollars for charitable activity in Canada that was never conducted. This apparent scam was run under the Exchange Fund. Evidence of this scam comes from a large series of covering letters on payments made by the Tides Foundation and tax returns. Five examples of payments that were received by Tides Canada Foundation but were not entirely spent on charitable activity in Canada are listed below, for a total of $3.1 million:

• 2010: $450,000
• 2011: $260,000
• 2012: $575,000
• 2013: $825,000
• 2014: $450,000
• 2015: $600,000

U.S. tax returns and other documents indicate that most of the $3.1 million transferred to Tides Canada Foundation via Collette Foundation Canada was then transferred to a pair of U.S. charities based in Pawtucket, Rhode Island that are managed by the original donors. The funds were then spent by those charities. In essence, it appears to me that, from my lay perspective, Tides Canada was 'selling' a service that enabled another charity (or charities) to issue receipts for tax deductions for millions of dollars worth of charitable activity in Canada that never actually happened. If, indeed, this occurred, this is a serious violation of the Income Tax Act and is grounds for revocation of charitable status. For more about this, readers are referred to a paper that I submitted as part of my testimony to a Senate committee: Tides Canada Foundation and Collette Travel, Pawtucket, Rhode Island.

In December, Mark Blumberg, a charity lawyer, reported at his blog that Tides Canada Foundation was closing its "international donor matching system," another term for the Exchange Fund. Mr. Blumberg also reported that Tides Canada charged a 10 percent fee, ie. $100,000 on a $1 million transfer. That's a hefty cut.

In December of 2016, the Canada Revenue Agency reported on the results of its political activity audits, as part of a larger report. Of the 42 charities audited, 41 were somehow in the wrong. Only one charity was rated “No Problem Found" by the CRA. In keeping with the privacy provisions of the Income Tax Act, the names of the audited charities were not released.

In its interim report on the results of the CRA’s political activity audits, the CRA reported that it had found “delivery of an undue benefit to person involved with a charity.” That is precisely what I was concerned about back in 2010 when I first reported to the CRA that one of the charities in the Tides network, the Endswell Foundation, had made payments for more than $US 1 million to Interdependent Investments Ltd., a private company of Mr. Solomon.

In January, I sent a letter to Joel Solomon to inquire about whether Endswell has been under CRA audit, and specifically, about whether the CRA had found that Endswell was in the wrong for its payments to Interdependent Investments. Mr. Solomon could easily have answered “No.” But, he didn’t. Instead, Mr. Solomon replied, “Any assumption that my non-responses to your assertions implies agreement, is incorrect.” If Mr. Solomon and/or The Endswell Foundation is not in trouble with the CRA, why doesn’t he simply say so?

As I explain in a separate post, with regards to the results of the CRA’s audit of Tides Canada Foundation, the stakes are high, not only for Tides Canada but also for its U.S. funders, particularly the Gordon & Betty Moore Foundation which has granted at least US$ 70 million to Tides Canada.

In June of 2014, I was told by a representative of the Moore Foundation that Tides Canada was in trouble with the CRA because of its Exchange Fund. However, at the time, with no documentation of that, there wasn't much to discuss. Now, there is.

The CRA Audit of Tides Canada . . . . Why The Stakes Are High

PHOTO: Prime Minister Justin Trudeau opening the Actua Centre in Kitchener Waterloo, a project funded by Google, via The Tides Foundation. January 14, 2016.

If Tides Canada Foundation were to lose its charitable status in Canada, this would trigger a domino effect that would cause problems with the Internal Revenue Service in the United States, not only for Tides Canada but also for its big U.S. funders. This is why the stakes are so high when it comes to the outcome of Tides Canada's audit by the Canada Revenue Agency. A poor outcome would reflect badly not only on Tides Canada and its U.S. parent organization, The Tides Foundation ("Tides USA") but also, to some extent, on the foundations that have spent tens of millions of dollars via Tides USA and Tides Canada. Furthermore, if Tides Canada were to lose its charitable status, it would no longer be able to serve as a funding channel to activist groups.

Tides Canada Foundation is a registered Canadian charity and has equivalency in the U.S. as a 501(c)3 charity. A significant share of the total revenue of Tides Canada is from the U.S. In 2015, for example, fully 70 percent of the total revenue of Tides Canada Foundation was from outside Canada, presumably from the U.S. (See Line 4575)

Over the past decade, Tides Canada has had combined, total revenue of more than $250 million (See here & here). Indeed, this is no small operation. If one were to think of activism as an industry, it would be fair to say that Tides Canada is a leader in much the same way as the Fraser Institute is a leading think tank. Because of its size and leadership status, a scandal at Tides Canada would bring more scrutiny to the charitable sector as a whole, particularly to the organizations that Tides Canada funds. In 2015, Tides Canada funded more than 200 organizations.

Warren Buffet’s foundation, Google and the Gordon & Betty Moore Foundation are examples of some of the powerful, billionaire funders that anonymously spend millions of dollars via Tides USA and Tides Canada. To get an idea of the scale of the large sums that Tides USA receives and then re-distributes, consider that in 2015, the total amount that The Tides Foundation received in contributions and grants was $152 million. Of that, nearly half was from nine sources. The largest contribution was $21 million. Another was for $15 million. Evidently, a large portion of the millions that Tides USA disperses comes from wealthy, anonymous sources.

The Gordon and Betty Moore Foundation is the biggest funder of environmental activism in British Columbia, and has granted more than $190 million to First Nations, environmental and other organizations working in B.C. By far, the top recipient of funds from the Moore Foundation is Tides Canada, which has been granted at least $70 million. Tides Canada spends that money internally and re-grants it to other groups, particularly First Nations organizations.

The Novo Foundation (“NOVO”) is funded exclusively by Warren Buffett, the famous investor and philanthropist. Buffett has granted at least $672 millon to NOVO and is its sole benefactor, tax returns show. What this means is that all of the funds that NOVO provides come directly from Warren Buffett. Mr. Buffett is not, however, involved in NOVO's day-to-day operations as NOVO is managed by Mr. Buffett’s son and his son’s wife, Peter and Jennifer Buffett. One of the top recipients of funds from the Novo Foundation is Tides USA.

Over the past decade, NOVO has granted at least $47 million to Tides USA (2004 - 2014). Of that, $15 million was for an Environmental and Indigenous Leadership program and $15 million was for an “Anonymous Donor-Advised Fund.” In 2014 alone, the most recent year for which tax returns are available, NOVO paid Tides USA $7.5 million for an “anonymous donor fund.”

Via Tides USA, NOVO funds some influential organizations including, for example, Idle No More. But who would have thought that Idle No More was funded indirectly by Warren Buffett? This is an example of how Tides USA obscures the big funders behind some grassroots organizations.

Another significant funder of The Tides Foundation is Google, but this too is not commonly known. Evidence of the importance of Google as a funder of Tides comes from a large series of covering letters on payments made by Tides USA. These covering letters were posted at the web-site of Tides during November of 2013. Of the 2,700 payments for which covering letters were found, more than 500 are for funds that Tides USA was dispensing on behalf of Google. Evidently, this suggests that Tides USA is an important partner of Google.

In Canada, one of the largest grants that Tides has made on Google’s behalf was US$1.5 million for ACTUA, a new Google centre that was opened in Kitchener-Waterloo by none other than Prime Minister Justin Trudeau. That opening, in January of 2016, was one of Justin Trudeau’s first public engagements as Prime Minister of Canada. Incidentally, Google also provided nearly $20,000 to the Dogwood Initiative for its advertising as a third party in the 2015 federal election. Dogwood was active in 19 B.C. ridings and claims credit for helping the Liberal party to win 15 ridings - and a majority government. Dogwood led the campaign against the Northern Gateway pipeline and is now actively campaigning against the proposed expansion of Kinder Morgan's pipeline.

On the Canadian economy and particularly in the political arena, the influence of Tides and Tides Canada is  far-reaching. With more than 200 employees and annual expenditures of roughly $30 million, Tides Canada is a hub of activism and has funded major campaigns against all of Canada’s main resource-based industries: forestry, mining, oil and gas, and salmon farming. While there is a grain of truth to some of the claims made by these campaigns, many of their claims are exaggerations to the point of being false and misleading. Nevertheless, these campaigns have flummoxed and stalled industry and have hurt investor confidence in Canada.

Over the past decade, the total assets of Tides Canada have soared to $58 million. From investment income alone, Tides Canada now earns an annual income of more than $2 million. (See Line 4580). That's no small amount. One can fund a lot of activism with $2 million per year. That's why it is important to know where Tides Canada's assets came from. 

Tides is a particularly important conduit of funds for anti-pipeline activism that has stalled construction of major pipelines, costing Canada billions of dollars in lost revenue and royalties. Totalling $35 million Tides has made more than 400 payments to activist groups involved in anti-pipeline activism to stop the export of Alberta oil.

When the anti-pipeline Tar Sands Campaign first came to light, the motivation of its funders was not entirely clear. But now it is. According to Michael Marx who has been leading the Tar Sands Campaign for nearly a decade, "From the very beginning, the campaign strategy was to land-lock the tar sands so their crude could not reach the international market where it could fetch a high price per barrel."

Land-locking Canada's single most important national export, thereby depriving Canada of billions of dollars in royalties, revenue, jobs and income, is not a charitable purpose. As such, registered charities should have no part in this campaign. And yet, more than a dozen Canadian charities have received U.S. funds for their participation in this campaign. Some of these payments have been channeled through the Tides Canada Foundation Exchange Fund in such a way that these payments are not listed in the U.S. tax returns of the Tides Foundation nor Tides Canada Foundation. Were it not for the covering letters on a large series of payments that popped up in Google a few years ago, there would be no publicly available information about these payments to Canadian environmental charities via the Tides Canada Foundation Exchange Fund.

  

Given that payments for anti-pipeline activism were made via the Tides Canada Foundation Exchange Fund, it bears mention that Tides Canada Foundation has processed at least $22.6 million via this fund. That said, it is important to note that from covering letters on payments made via the Exchange Fund, it is clear that anti-pipeline activism accounts for only a small portion of what has been funded via the Exchange Fund.

The Tides Canada Foundation Exchange Fund is also referred to as an "international donation matching system."  At the end of 2016, this fund was closed.  According to Mark Blumberg, Tides Canada charged a 10 percent fee on funds that it processed via its "international donation matching system," i.e. $100,000 on a $1 million donation.  The question is, why was the Exchange Fund closed? Why would Tides Canada Foundation close such a lucrative operation if it did not run afoul of the law?

Was Tides Canada required to close its Exchange Fund as part of a Compliance Agreement with the Canada Revenue Agency because the operation of this fund involved acting as a conduit to ineligible organizations? If so, why was the charitable status of Tides Canada Foundation NOT revoked - as it has been for more than 50 other charities who committed some of the same or similar violations of the Income Tax Act? These are fair questions.

In summary, given the influence of Tides-funded organizations as well as their close relationship with both Vancouver’s mayor and Gerald Butts, the Principal Secretary to Prime Minister Justin Trudeau, it is not too much to ask Tides Canada to divulge the results of its audit by the CRA. If Tides Canada got an ‘all-clear’ from the CRA, Tides Canada should have no hesitation to say so – or, come clean.